PI Industries posted strong quarter with 16% growth in sales for the quarter. However, key highlight of the quarter is improvement in margins which has moved up by ~348 up yoy and ~859 bps qoq. Hold for a target of Rs465.

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Q1FY15ResultUpdate–30July2014
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Recommendation HOLD Another strong performance…
PI Industries posted strong quarter with 16% growth in sales for the quarter.
However, key highlight of the quarter is improvement in margins which has
moved up by ~348 up yoy and ~859 bps qoq (Q1 is seasonally strong quarter in
terms of margins) to 22.9%. The company is expected to end FY15 with sales
growth of 20% with 100-200 bps improvement in margins (as against the earlier
guidance of 25% growth and stable margins).
Key Highlights
 CSM: Key highlight of the quarter was increase in order book to $435mn
from $395 mn in Q4FY14 despite clocking revenues of Rs 225 cr (up 8%
yoy). Q3 and Q4 quarters are expected to high growth quarters as the
company is expecting few products to get commercialized in addition with
higher volumes from existing products. Top 5 products contribute 45% of
revenues and Top 5 customers’ accounts for 50-60% of revenues. Jambusar
plant is working at its full capacity hence the company is undergoing Phase
II expansion and putting up two new lines at the site which are expected to
be operational by Q2FY16 with capex of Rs 300 cr spread over FY15-16.
Management has guided for 20% growth for FY15.
 Agri: PI industries’ Agri segment has reported healthy sales growth of
24.5% at Rs 246cr for the quarter. The performance is backed equally by
both volume growth (12-13%) and mix of price and product mix (12-13%).
One in-licensed insecticide to be launched in Q2FY15 and one more
product in Rabi season. despite posting good growth in Q1, the company
has lowered its guidance to 20% as a cautious move owning to current
monsoon season.
Valuation & Recommendation
We believe that healthy order book of CSM, strong balance sheet and new
product launches in Agri Input segment will drive near to medium term growth.
On the other hand CSM segment gaining traction with higher margins is acting
as a de-risk model to domestic business. In addition, macro factors like low per-
capita pesticides consumption in the country, increasing MSPs and increasing
acceptance for the need of crop protection products make PI Industries a good
long term bet. We continue to maintain our positive stance on the stock. We
recommend to HOLD the stock for the price target of Rs 465 (20x on FY16E
EPS)
CMP (28/07/14) Rs 406
Target Price Rs 465
Sector Agrochemicals
Stock Details
BSE Code 523642
NSE Code PIIND
Bloomberg Code PI IN
Market Cap (Rs cr) 5,526
Free Float (%) 41.4
52- wk HI/Lo (Rs) 434/120
Avg. volume BSE (Quarterly) 26,076
Face Value (Rs) Re. 1
Dividend (FY 14) 200%
Shares o/s (Cr) 13.55
Relative Performance 1Mth 3Mth 1Yr
PI Ind. 21.7% 65.6% 208.8%
Sensex 2.7% 14.6% 31.6%
Shareholding Pattern 30
th
June 14
Promoters Holding 58.57
Institutional (Incl. FII) 25.11
Corporate Bodies 2.44
Public & others 13.88
Runjhun Jain 022 3926 8177
Senior Research Analyst
runjhun.jain@nirmalbang.com
Year
Consolidated
Sales
(Rs cr)
Growth
(%)
EBITDA
(Rs cr)
Margin
(%)
Rep. PAT
(Rs cr)
Margin
(%)
EPS
(Rs)
P/E
(x)
ROE
(%)
FY13A 1151.4 31.0% 180.9 15.7% 97.3 8.5% 7.2 56.8 22.7%
FY14A 1595.5 38.6% 289.0 18.1% 188.1 11.8% 13.8 29.4 30.7%
FY15E 1963.8 23.1% 379.0 19.3% 246.5 12.6% 18.1 22.4 30.9%
FY16E 2414.3 22.9% 475.6 19.7% 316.4 13.1% 23.2 17.5 30.6%
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25-Jul 25-Oct 25-Jan 25-Apr 25-Jul

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Q1FY15ResultUpdate–30July2014
Quarterly Result Table (Standalone)
Particulars (Rs Cr) Q1FY15 Q1FY14 yoy Q4FY14 qoq
Net Sales 471.2 406.1 16.0% 362.7 29.9%
Cost of materials 247.3 221.8 11.5% 191.9 28.9%
Purchase of goods 20.8 18.2 14.4% 5.8 259.7%
Employees Cost 31.7 27.4 15.8% 31.8 -0.4%
Other Exps 63.5 59.8 6.1% 81.3 -21.9%
EBITDA 108.0 78.9 36.8% 51.9 107.9%
margins 22.9% 19.4% 14.3%
Depreciation 9.8 7.3 8.2
EBIT 98.2 71.6 37.2% 43.8 124.4%
Interest 1.8 3.8 -53.9% 3.3 -47.2%
Other Income 3.6 0.7 417.3% 7.8 -53.8%
Exchange loss/(gain) -3.9 -6.7 -41.4% 0.8 -563.0%
PBT 103.9 75.1 38.3% 47.4 119.4%
Tax 32.2 26.6 21.1% 2.2 1378.9%
Tax rate 31.0% 35.4% 4.6%
EO items 0.0 0.0 0.0
PAT reported 71.7 48.5 47.8% 45.2 58.7%
PAT adjusted 71.7 48.5 47.8% 45.2 58.7%
Equity Capital 13.5 13.5 13.5
FV 1.0 1.0 1.0
Adj EPS 5.3 3.6 47.8% 3.3 58.7%

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Q1FY15ResultUpdate–30July2014
Financials
P&L (Rs. Cr) FY13A FY14A FY15E FY16E Balance Sheet (Rs Cr) FY13A FY14A FY15E FY16E
Net Sales 1151.4 1595.5 1963.8 2414.3 Share Capital 13.5 13.6 13.6 13.6
% change 31.0% 38.6% 23.1% 22.9% Reserves & Surplus 518.2 680.9 887.3 1154.0
EBITDA 180.9 289.0 379.0 475.6 Net Worth 531.7 694.5 900.9 1167.6
EBITDA margin (%) 15.7% 18.1% 19.3% 19.7% Net Deferred Tax Liab 48.3 43.7 43.7 43.7
Depn & Amort 22.0 31.6 38.7 46.1 Total Loans 217.2 115.9 83.3 73.2
Operating income 158.9 257.4 340.3 429.5 Other LT Liab 12.5 13.8 14.8 15.8
Interest 21.8 11.8 9.2 8.1 Trade Payables 239.6 291.6 333.7 391.0
Other Income 8.2 15.8 16.0 18.0 Provisions 22.4 32.4 34.4 37.4
PBT 145.0 261.4 347.1 439.4 Other CL 63.0 126.1 170.0 200.0
Tax 47.7 73.3 100.7 123.0 Total Liabilities 1134.7 1317.9 1580.8 1928.7
EO* 0.0 0.0 0.0 0.0 Net Fixed Assets 478.1 534.2 650.4 769.3
Reported PAT 97.3 188.1 246.5 316.4 Capital WIP 60.5 35.0 30.0 15.0
Adj PAT 97.3 188.1 246.5 316.4 Investments 0.5 0.5 0.5 0.5
Sh o/s - Diluted 13.6 13.6 13.6 13.6 Cash & Bank 16.1 43.8 53.8 107.5
Adj EPS 7.2 13.8 18.1 23.2 Inventories 241.7 318.8 367.9 450.7
EPS growth (%) -6.0% 93.2% 31.0% 28.4% Debtors 262.5 256.8 327.3 402.4
Cash EPS 8.8 16.1 21.0 26.6 Other CA 75.2 128.9 150.9 183.3
Quarterly - Standalone Sep-13 Dec-13 Mar-14 Jun-14 Total Assets 1134.7 1317.9 1580.8 1928.7
Net Sales 462.8 363.4 362.7 471.2 Cash Flow (Rs. Cr) FY13A FY14A FY15E FY16E
EBITDA 92.1 62.7 51.9 108.0 Op CF before tax & WC 180.6 289.0 379.0 475.6
Dep & Amorz 8.0 7.9 8.2 9.8 Change in WC -9.9 -3.3 -52.5 -99.1
Operating Income 84.1 54.8 43.8 98.2 Tax -47.7 -73.3 -100.7 -123.0
Interest 2.7 2.0 3.3 1.8 CF from Operation 123.0 212.4 225.8 253.5
Other Inc. 3.1 4.0 7.8 3.6 Capex -181.3 -62.1 -150.0 -150.0
PBT 82.0 53.5 47.4 103.9 Inv & Oth Income 8.2 15.8 16.0 18.0
Tax 26.7 18.8 2.2 32.2 CF from Investing -173.1 -46.3 -134.0 -132.0
EO (less)/Add 0.0 0.0 0.0 0.0 Diviend Paid -15.8 -31.9 -40.1 -49.6
Reported PAT 55.3 34.7 45.2 71.7 Sh Capital & Premium 118.6 0.0 0.0 0.0
EPS (Rs.) 4.1 2.6 3.3 5.3 Interest Paid -21.8 -11.8 -9.2 -8.1
Ratios FY13A FY14A FY15E FY16E Loans -29.6 -101.3 -32.6 -10.1
EBITDA margin (%) 15.7% 18.1% 19.3% 19.7% Interest Paid & Others -16.5 -5.2 -9.1 -8.1
Adj PAT margin (%) 8.5% 11.8% 12.6% 13.1% CF from Financing 56.8 -138.4 -81.8 -67.8
PAT Growth (%) -6.0% 93.2% 31.0% 28.4% Net Chg. in Cash 6.7 27.6 10.0 53.7
Price Earnings (x) 56.8 29.4 22.4 17.5 Cash at beginning 9.4 16.1 43.8 53.8
ROE (%) 22.7% 30.7% 30.9% 30.6% Cash at end 16.1 43.8 53.8 107.5
ROCE (%) 24.1% 33.0% 37.9% 38.6% Per Share Data FY13A FY14A FY15E FY16E
Debt/Equity Ratio (x) 0.5 0.3 0.0 0.0 Adj EPS 7.2 13.8 18.1 23.2
Price/BV (x) 10.4 8.0 6.1 4.7 BV per share 39.1 51.0 66.2 85.8
EV / Sales 4.9 3.5 2.8 2.3 Cash per share 1.2 3.2 4.0 7.9
EV / EBITDA 31.5 19.3 14.7 11.5 Dividend per share 1.0 2.0 2.5 3.1

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Disclaimer:
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